1. Main Findings

The following summary gives estimates of Total Income from
Farming for the latest three years, together with their constituent
parts, and the percentage changes after accounting for
inflation.

Why are the results referred to as
"estimates"?

This publication contains three sets of estimates of Total
Income from Farming (
TIFF)

final estimates for the calendar year 2014
second estimates for the calendar year 2015
initial estimates for the calendar year 2016.

Many of the data used in calculating income from farming for
2016 will only become available during 2017, and some not until
2018. In particular, the final results of the Farm Accounts Survey
2016-17, to be used within many of the 2016 costs estimates, are
not available until 2018.

This means that the 2016
TIFF estimates
published here contain a large number of forecasts, often based on
projecting past trends. In January 2018 we will publish updated
"second estimates" for 2016, which may differ substantially from
those published here. Final estimates for 2016 will then be
published in January 2019.

The tables in this publication give a breakdown of the
constituent elements of
TIFF. In
Table 1 we have attempted to illustrate the
degree of certainty in the estimates of each element by means of
colour coding.

Based heavily on proxy estimates

Based on incomplete data

Based on complete/final data

Why do initial estimates of
TIFF often
change so much when they are updated?

TIFF is
calculated as income minus costs. Income and costs are
similarly-sized large figures, giving a relatively small difference
as the value of
TIFF. This
means that a small percentage update in estimates for income or
costs may automatically lead to a large percentage revision in
TIFF.

For example, if income = 100 and costs = 96, then
TIFF = 4. If
we then update the estimate for income upwards by just one per
cent, and for costs down by just one per cent, income = 101 and
costs = 95, so
TIFF = 6, a 50
per cent increase in the value of
TIFF.

So reasonable small updates in the estimates of income and costs
can lead to what may seem an unreasonable 50 per cent change in
TIFF. See also
note 4.4.

What does "in real terms" mean?

It shows, for previous years, the value of the income or costs
expressed in today's prices. This is because, for example, income
of £10,000 in 1990 could have paid for something that
nowadays costs £20,000, so we say the 1990 income was worth
£20,000 in today's prices.

To do this we simply multiply our data on previous years'
figures by the amount prices have gone up since then. In our
example prices have doubled, so we multiply the 1990 income by two
to see what it would be worth in today's prices. For these
multipliers we now use the
GDP deflator,
from the Office for National Statistics (
ONS)
[1].